Line 2 talks deadlocked: SEA Times

Dominic Gates at The Seattle Times has a story that’s important to Washington State and South Carolina: talks between Boeing and the IAM are deadlocked, he writes.

Boeing wants a 10-year, no-strike contract in exchange for putting Line 2 of the 787 in Everett. The IAM wants a promise the 737 replacement will be in Washington, too, Gates writes–but Boeing is unwilling to make this guarantee.

Boeing believes that the $1.5bn cost of putting Line 2 in South Carolina, the risk associated with it (new, untrained workers) and the “modest” inefficiencies of having two lines far apart, will be offset by diversifying its labor force and the stability in the production line. The IAM’s 57 day strike last fall cost the company $2bn.

There are several fallacies in Boeing’s thinking, we and others we have talked to believe. These are:

  • If Boeing thinks it will have labor peace by putting Line 2 in Charleston’s non-union shop, think again, say observers. The move will enrage the IAM 751 here, leading to “work-by-the-rules” actions that will slow production; and
  • This would likely happen not just on the 787 line at Everett but also the 747, 767 and 777 lines there; and the 737 line in Renton; and
  • Parts that come from Charleston to Everett could be tagged as not up to specification by IAM members, leading to disruptions and delays; and
  • If management thought 2008 labor negotiations were difficult, wait until 2012. These would make 2008 look like a Sunday picnic; and
  • Locating Line 2 in Charleston would do absolutely nothing to prevent future strikes tat in all likelihood would shut down Charleston because of the close production and assembly ties between Charleston and Everett.

We recently met with a major supplier to Boeing on all its 7-Series airplanes with knowledge of operations at Renton, Everett and Charleston. This supplier, who has no love for the IAM or for management’s mismanagement of the 787 and 747 programs, said it would be crazy to put Line 2 in Charleston. It would take at least four years to get the line running smoothly. The IAM’s retaliation in Washington would be a “bloodbath,” this supplier predicts.

That this would certainly lead to Boeing putting the 737 and 777 replacements elsewhere and over the next couple of decades completely wind down operations in Washington is besides the point. The IAM would rather fight than compromise in such circumstances, observers tell us.

Other possible consequences that get little attention are what happens to support for Boeing’s bid for the KC-X contract? The IAM and its parent, the AFL-CIO, have already come out swinging on behalf of Boeing. The engineer’s union, SPEEA, is also supporting the effort, as are Washington’s Congressional delegation and state politicians. Will any or all of this support dry up or at the least become tepid if Boeing locates Line 2 out of the State? We know of one party mentioned here that says it will stop supporting the tanker bid if Line 2 isn’t located in Everett.

CEO Jim McNerney understandably wants stability. But putting Line 2 in Charleston is hardly a guarantee that he will get it. We think quite the contrary. The instability will only get worse.

4 Comments on “Line 2 talks deadlocked: SEA Times

  1. The conferance call didn’t fail to satisfy.

    Production? Sunshine and roses baby.
    Scheduals? On time and on target.

    And as if on cue, the caller from the puget sound business journal (the last call) serves up raw meat for McNerney to gnaw at, the machinist’s union, which he gave the business and the beans and the whatever.

    Quite unnecessarily, and very recklessly. You could feel the bile rising in his food tube.

    Now the times artical claims a strain between the parties. Not a shock. Equally unmoving is the revelation that McNerney wants to take all without any give on Boeing’s part of any sort. That is what Boeing is these days. They’d have you kids lunch money if nobody was watching.

    I can only conclude that James mcNerny is quite satisfied to bankrupt the company if it means acting in accordance with his idiology. The man is bereft of business acumin. His business savvy seems bested by the union, who apparantly knows a bad deal when they see one.

    I’m no big union guy, but lets be pragmatic here ok? If I were the I.A.M, I’d say “ok, so leave, and see you in 2012” too.

    Business is business.

    But something smells very bad here. There is no way there could be any sort of agreement in 2 weeks, or anywhere close. A vote in accordance with labor laws and the union’s own rules would have to be held, and that is a long lead time event I would believe. Maybe Scott, you can call and ask them.

    I’ve analyzed this situation eighteen ways to sunday, and I just can’t see a happy, productive, and profitable ending if Boeing opens line 2 in S.C.

    Only waste. Huge labor strife. More debt. (Did you catch where they want to fund thier pension plans with BA stock? That made me laugh till I cried).

    Meanwhile I’m in Dec and Jan puts and have tighted the trailing stop on whats left of my BA stock in case they blow it while I’m doing something more rewarding that being a BA shareholder. Which is just about anything.

  2. Now there is a strategy for failure if I ever saw one. How to bankrupt your employer and put yourself out of a job in 5 easy lessons. Not that the IAM is any brighter than the UAW union sheep, but a repeat of Detroit is going to have the same results.

  3. I’m starting to hope we’ll see a second line in Washington state, with a 15+ “no strike” deal. One can always be optimistic. 😉

    The 737RS? Has that even been committed to paper yet?

  4. Pingback: IAM may well “blow it” over 787 Line 2 « Leeham News and Comment

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